The landscape of public procurement in the UK is undergoing a significant transformation after the Procurement Act 2023 came into effect on 24 February 2025.
Just ahead of the implementation date – 16 months after it passed into law – the Government released its updated National Procurement Policy Statement (NPPS), setting out strategic priorities that will shape how public bodies should approach procurement under the new regime.
Healthcare providers should ensure they align their procurement processes with the national objectives laid out within the framework of the NPPS.
Under the Act, they must have regard to the NPPS and will likely need to demonstrate this consideration at various points during procurement exercises.
Understanding the new procurement regime
The Procurement Act 2023, which received royal assent in October 2023, represents a decisive break from EU-derived regulations.
The legislation introduces a unified framework encompassing public contracts, utilities, concessions, and defence procurement across England, Wales, and Northern Ireland.
This consolidated approach aims to enhance efficiency, transparency, and accountability in public sector procurement.
The overarching principle of the Act is to ensure contracting authorities deliver value for money, maximise public benefit, act with integrity throughout a procurement exercis,e and continue to ensure equal treatment of bidders.
This change reflects a more UK-centric approach, with contracting authorities required to consider national policy objectives in their decision-making. These missions have now been published in the NPPS.
Alongside the Act, healthcare organisations must understand where the Provider Selection Regime (PSR) – which came into force in England on 1 January 2024 as part of the Health Services (Provider Selection Regime) Regulations 2023, and in Wales on 24 February 2025 via the Health Services (Provider Selection Regime) (Wales) Regulations 2025 – fits into the procurement jigsaw.
The PSR covers the procurement of healthcare services delivered to patients and service users – such as GPs or dental services – with the aim of giving relevant healthcare authorities greater flexibility by streamlining the competitive tendering process.
However, the PSR does not apply to works, goods or non-healthcare services, such as medicines, medical equipment and building works, unless they are part of a mixed procurement. These items fall under the regular procurement regime established by the Procurement Act.
When planning a procurement strategy, healthcare bodies need to determine whether the solution to be procured is purely a healthcare service or a technology service. This classification is crucial as it determines which procurement regime applies.
Core strategic priorities of the National Procurement Policy Statement
In the revised NPPS, published on 13 February 2025, the Government aims to align the procurement regime with broader policy missions by better positioning UK firms in public contract competitions, supporting sustainable growth, and driving up living standards. It outlines several key priorities that healthcare organisations must consider.
Economic growth and innovation
Healthcare bodies are expected to create opportunities for small businesses and social enterprises, while supporting high-quality employment with fair wages. The emphasis lies on fostering innovation and emerging technologies, aligning with the Government's Industrial Strategy.
Environmental sustainability
A central focus is on how goods and services procured by public bodies can support the acceleration towards net zero. Healthcare bodies must prioritise green technologies and implement rigorous environmental standards in their procurement activities, assisting the nation's ambition to become a clean energy leader.
Community development
The NPPS emphasises the importance of strengthening community cohesion through procurement practices. Healthcare bodies should structure their procurement to facilitate employment opportunities for disadvantaged groups, contributing to safer and more inclusive communities.
Opportunity and access
Addressing skills gaps and removing barriers for young people and under-represented groups forms a crucial component of the policy. Healthcare bodies must ensure their procurement practices harness diverse talent pools and promote inclusive growth.
Supporting the NHS
The statement recognises the role of procurement in supporting physical and mental wellbeing through high-quality employment. Healthcare bodies must consider the health impacts of their procurement decisions on both the workforce and broader community.
Practical implementation
The government has updated the Sourcing Playbook alongside the NPPS, introducing a new public interest test to enhance procurement effectiveness and value for money.
Healthcare providers must now carefully evaluate whether services should be outsourced or delivered in- house, ensuring optimal use of public resources.
The framework places increased emphasis on supporting small and medium-sized enterprises (SMEs), and voluntary, community, and social enterprises (VCSEs), while building robust commercial capabilities, particularly in contract management.
Impact on healthcare organisations and suppliers
For healthcare bodies, the NPPS represents more than just guidance — it establishes a framework that must be actively considered in procurement design and delivery. This requires:
- Developing procurement strategies that align with national priorities
- Embedding social value considerations into decision-making processes
- Supporting local economic growth through engagement with SMEs
- Prioritising environmental sustainability in procurement practices
- Building internal capabilities for effective procurement management
The NPPS challenges contracting authorities to adopt a more holistic approach to procurement, balancing cost-effectiveness with broader social, economic and environmental impacts.
For suppliers, market access should be simplified by reduced administrative requirements and improved visibility of opportunities. They will have greater scope for dialogue with buyers and to demonstrate value beyond price considerations, which is particularly relevant for complex solutions.
However, they must also be aware of greater transparency requirements under the Act, which means at least three key performance indicators (KPIs) must be published for contracts exceeding £5m, and suppliers should be regularly assessed against these.
Under-performing suppliers can be placed on a central debarment list that makes them excludable on a discretionary ground from future public tenders and can lead to the termination of other public contracts.
Therefore, businesses should ensure they can realistically meet KPIs, as well as conduct due diligence on their corporate structure and those of their own suppliers to ensure compliance.